Looking Back and Looking Ahead

The stocks in The Energy Strategist’s Best Buys List doubled the return of the S&P 500 Energy Index in the first three months of 2012, paced by names that offered exposure to oil-weighted production, deepwater exploration and development, and the growth of international markets for liquefied natural gas (LNG).

In this issue, we look back at the quarter that was and revise our outlook for the stock market, economy and commodity prices. With a number of Portfolio holdings continuing to trade well above our buy targets, readers that haven’t already done so should consider taking some profits off the table in these overbought names.

The risk of a 5 percent to 10 percent pullback in the stock market continues to rise, giving investors a potential opportunity to buy high-quality growth stories at a discount and lock in higher yields on dividend- and distribution-paying stocks.

Investors should also note that we issued a Flash Alert on April 18 in which we added the newly listed SandRidge Mississippian Trust II (NYSE: SDR) to the Growth Portfolio as a buy under 23.

In This Issue

The Stories

1.
Whereas the S&P 500 Energy Index eked out a 3.9 percent return during the first quarter, the stocks in Elliott’s Best Buys List gained 6.5 percent with our hedges and 7.4 percent without these short bets. See First Quarter in Review.

2.
With the distortive effects of normal seasonal adjustments in an abnormally warm winter no longer inflating US econnomic data, investors’ overly optimistic outlook sets the stage for a 5 percent to 10 percent pullback in the S&P 500 and other major international indexes. See Back to the Future: Economy and Stock Market.

3. Here’s our updated outlook for West Texas Intermediate crude oil, Brent crude oil, North American natural gas, international LNG markets, US thermal coal and international metallurgical coal. See Back to the Future: Energy Commodities.

4. Elliott updates the latest changes to his Best Buys List. See Updates to Elliott’s Best Buys List.

The Stocks

Chesapeake Granite Wash Trust (NYSE: CHKR)–Buy < 25 in Growth Portfolio
SandRidge Mississippian Trust I (NYSE: SDT)–Hold in Growth Portfolio
Penn Virginia Resource Partners LP (NYSE: PVR)–Buy < 29 in Conservative Portfolio
Schlumberger (NYSE: SLB)–Buy < 100 in Growth Portfolio
Weatherford International (NYSE: WFT)–Buy < 17.50 in Growth Portfolio
Petroleum Geo-Services (OTC: PGSVY)–Buy < 17.50 in Aggressive Portfolio
SeaDrill (NYSE: SDRL)–Buy < 45 in Aggressive Portfolio
Core Laboratories–(NYSE: CLB)–Hold, Sell 50% of Initial Position in Growth Portfolio
ProShares Short S&P 500
(NYSE: SH)–Buy < 37.50 in Hedges Portfolio
First Trust ISE-Revere Natural Gas Index (NYSE: FCG)–Sell Short > 15.50
GasLog (NYSE: GLOG)–Buy < 13 in Aggressive Portfolio
Peabody Energy Corp (NYSE: BTU)–Buy < 45 in Growth Portfolio
Nabors Industries (NYSE: NBR)–Buy < 20 in Aggressive Portfolio
Mid-Con Energy Partners LP (NSDQ: MCEP)–Buy < 26.50 in Growth Portfolio
Linn Energy LLC (NSDQ: LINE)–Buy < 40 in Growth Portfolio

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